I wonder how you would respond to this charge?
WENZEL RESPONSE:
@Zach:
Mises occasionally "played cricket" as well.
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From Richard Ebeling:
"For almost a quarter of a century, from 1909 to 1934 (except during the First World War), Mises worked as an economic-policy analyst and advisor to the Vienna Chamber of Commerce. From the ages of 28 to 53 (when he moved to Geneva, Switzerland to accept his first full-time academic position, at the Graduate Institute of International Studies) he spent his working day as a "policy wonk." And I mean a "policy wonk" — someone immersed in the factual details and economic policy specifics of, first, the old Austro-Hungarian Empire and, then, the Austrian Republic between the two World Wars. His statistical knowledge of "the facts" relating to Austrian fiscal policy, regulatory legislation, and monetary institutions and policy was precise and minute."
"What comes out from reading Mises's policy writings from this period of his European career is that if you had asked him a fiscal, or monetary, or regulatory-policy question in the context of his role as analyst at the Chamber of Commerce, he would not have said, and did not simply say, "laissez-faire" — abolish the central bank, deregulate the economy, and eliminate taxes."
"In the give-and-take of everyday Austrian politics and policy decision-making, Mises accepts that there are certain institutional "givens" that must be taken for granted, and in the context of which policy options and decisions must be worked out."
http://mises.org/daily/4189/The-Other-Ludwig-von-Mises-EconomicPolicy-Advocate-in-an-Interventionist-World
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I don't think this is any different from the approach I've taken. Sure, I'd love to abolish the central bank. I'd much prefer free banking with a commodity base. And I've written academic articles about alternative currencies. But within the context of current US monetary policy, I think it is foolish to say that those working in the Austrian tradition have nothing relevant to contribute. It is OK to offer second-best policy advice when first-best solutions are not on the table. Given that we have a central bank, and it is highly unlikely to be abolished, the best we can hope for to avoid (or, at the very least, dampen) monetary disturbance and the boom-bust cycle articulated by Mises and Hayek is the strict adherence to a nominal income level rule, with a free market in nominal income futures contracts.
Zach,
You have to ask what Mises thought about his work as a policy wonk and what he really accomplished in that role.
I believe Mises answered this himself in Memoirs (p.60) [my highlights]
I was sometimes accused of representing my viewpoint in a manner too abrupt and intransigent. It was also claimed that I could have accomplished more had I displayed a greater willingness to compromise. Gustav Weiss von Wellenstein, an old friend and the secretary general of the Central Association for Austrian Industry often lectured me on the same. The criticism was unwarranted; I could only be effective if I could present things as they appeared to me. When I look back at my work with the Handelskammer today, my only regret is my willingness to compromise, and not my intransigence.And (p. 98)
From time to time I entertained the hope that my writings would bear practical fruit and point policy in the right direction. I have always looked for evidence of a change in ideology. But I never actually deceived myself; my theories explain, but cannot slow the decline of a great civilization. I set out to be a reformer, but only became the historian of decline.
What can be done at the policy wonk level is very limited. Yes, maybe an increase in a minimum wage can be stopped somewhere or a plan for price controls can be derailed, but for the most part, as Mises experienced, it's not much and to compromise makes matters even worse. Things have to change at a much more fundamental level among the general public for the significant advancement of liberty. Effort spent in moving society in that direction, in the long run, will result in much greater rewards than wasting time developing compromises on most minor issues. And on bigger issues, it mostly makes zero sense.
Luther writes:
I think it is foolish to say that those working in the Austrian tradition have nothing relevant to contribute. It is OK to offer second-best policy advice when first-best solutions are not on the table. Given that we have a central bank, and it is highly unlikely to be abolished, the best we can hope for to avoid (or, at the very least, dampen) monetary disturbance and the boom-bust cycle articulated by Mises and Hayek is the strict adherence to a nominal income level rule, with a free market in nominal income futures contracts.I don't see this as compromise but surrender. I believe he distorts Austrian economics with his focus on " a nominal income level rule," which is about money printing. Rothbard, Mises AND Hayek all dismissed this on a theoretical level. If it is launched based on the advocacy of supposed Austrians and the inevitable business cycle distortions occur, then what? I'll tell you what. Statists will blame Austrians for the "failed results" of their policy prescription. From an Austrian perspective, in my view, Luther's proposed nominal income level rule,"within the context of current US monetary policy," makes no sense. In fact, it is downright dangerous-- as money printing always is, but beyond that it would dirty the Austrian school name for no good reason.
Luther writes: “Given that we have a central bank, and it is highly unlikely to be abolished, the best we can hope for to avoid (or, at the very least, dampen) monetary disturbance and the boom-bust cycle articulated by Mises and Hayek is the strict adherence to a nominal income level rule, with a free market in nominal income futures contracts.”
ReplyDeleteThere are too many problems with this for it to be considered an appropriate “transitional demand” (using Rothbard’s term for acceptable interim steps):
How is it decided that such a rule will “work”?
What does “work” mean? “Work” for whom?
Who will measure the data? What market mechanisms will be developed to regulate this? All macro data is meaningless to varying degrees; all macro data is not only subject to manipulation, it is inherently manipulated. There is no interim step possible under such a condition.
Most importantly, it does nothing to call into question the legitimacy of monetary central planning. The boom / bust cycle is only one of the negative consequences of central banking. First and foremost is the theft of assets by the favored, first recipients. Such a rule does nothing to address this immorality.
Where in this is the forceful demand to end the practice of central planning, whatever interim steps are proposed in the meantime? I will paraphrase Luther:
“Given that we have slavery, and it is highly unlikely to be abolished….”
Would an abolitionist have talked this way?
Whatever interim steps one might propose toward the end of central banking, such language is never acceptable.
"Sure, I'd love to abolish the central bank. I'd much prefer free banking with a commodity base. And I've written academic articles about alternative currencies. But within the context of current US monetary policy, I think it is foolish to say that those working in the Austrian tradition have nothing relevant to contribute. It is OK to offer second-best policy advice when first-best solutions are not on the table." --Will Luther
DeleteSo there is a national debt over $17 trillion, and unfunded liabilities over $100 trillion- and you would like to compromise your principled position to abolish the central bank? What a joke! If this isn't the time to stand on principal, when would that time be, Mr. Luther?
Rothbard explains in For a New Liberty Pg. 18:
"For to prefer a gradual whittling away to immediate abolition of an evil and coercive institution is
to ratify and sanction such evil, and therefore to violate libertarian principles. As the great abolitionist of slavery and libertarian William Lloyd Garrison explained: “Urge immediate abolition as earnestly as we may, it will, alas! be gradual abolition in the end. We have never said that slavery would be overthrown by a single blow; that it ought to be, we shall always contend.”
Bionic has it right too:
"'Given that we have slavery, and it is highly unlikely to be abolished….'
Would an abolitionist have talked this way?
Whatever interim steps one might propose toward the end of central banking, such language is never acceptable."
The party to be held responsible for the monetary crisis is, of course, the central bank due to it's monopoly over the currency. The idea of utilizing the central bank to repair the distortions it has created in the economy as an incremental step toward abolition is (quite frankly) asinine! These self-styled "libertarians" are really showing their true colors in these discussions, and in their unprincipled complicity are wolves in sheep's clothing.
When you do not stand by your principles, you have none.
I think this is a very astute point you make- "I don't see this as compromise but surrender. I believe he distorts Austrian economics with his focus on " a nominal income level rule," which is about money printing. Rothbard, Mises AND Hayek all dismissed this on a theoretical level. If it is launched based on the advocacy of supposed Austrians and the inevitable business cycle distortions occur, then what? I'll tell you what. Statists will blame Austrians for the "failed results" of their policy prescription. From an Austrian perspective, in my view, Luther's proposed nominal income level rule,"within the context of current US monetary policy," makes no sense. In fact, it is downright dangerous-- as money printing always is, but beyond that it would dirty the Austrian school name for no good reason."
ReplyDelete